29 Nov 2008

Commerzbank purchase accelerated

6:48 am on 29 November 2008

A takeover of Dresdner Bank by Commerzbank from insurer Allianz will be completed earlier than expected.

Commerzbank will now pay 5.1 billion euros ($US6.6 billion), substantially less than the 9.8 billion euro deal originally announced in September.

The BBC reports the acceleration of the deal is a result of falling share values: Commerzbank is down 61% since the deal was unveiled.

Commerzbank shares were up 2.7% and Allianz shares rose 9.1% in mid-afternoon trading on Friday in Frankfurt.

Commerzbank already owns 60% of Dresdner and the remaining 40% will be purchased in January.

The revised deal will mean that Commerzbank will no longer have to issue new shares, but will pay for the remainder in cash.

A major factor in Commerzbank's ability to pay more cash was a capital boost of 8.2 billion euros it received from the German government on 2 November.

Allianz will receive 1.4 billion euros for the remaining stake.

It said on Friday that the deal could now go ahead six to nine months ahead of plan.

Allianz originally paid 14 billion euros for Dresdner in 2001.